Why the Profit on Block Inc Stock?
fears of a U.S. recession, one question is how resistant Square-parent Block
Inc (NYSE: SQ) will be to a business downturn versus other digital
payment companies. Also, the price of Bitcoin has again dropped below a key
level of $20,000.
Block stock has retreated about 64% in 2022. Square stock hit a new
52-week low on Sept. 22. SQ stock has under-performed versus the S&P 500,
which is down nearly 22%.
Jan. 31 closed the acquisition of Australia-based consumer lending startup
Afterpay. Its growth has slowed. And, "buy now, pay later (BNPL) fintech
companies like Afterpay face increased regulation.
The Profits Explained.....
Entered the Block Inc stock trade on Friday, September 23, 2022 at 9:35am for $3.37.
Exited the trade Friday, September 23 at 9:59am for $4.31,
a potential profit of 28%.
Important to Note: As this was a very quick trade many
members may not have been able to exit in time – but if the market continues
its downward spiral in the week ahead then further profits are expected.
Don’t miss out on further trades – become a member today!
provides payment and point-of-sale solutions in the United States and
internationally. The company's commerce ecosystem includes point-of-sale
software and hardware that enables sellers to turn mobile and computing devices
into payment and point-of-sale solutions.
hardware products, including Magstripe reader, which enables swiped
transactions of magnetic stripe cards; Contactless and chip reader that accepts
EMV® chip cards and Near Field Communication payments; Chip card reader, which
accepts EMV® chip cards and enables swiped transactions of magnetic stripe
cards; Square Stand, which enables an iPad to be used as a payment terminal or
full point of sale solution; and Square Register that combines its hardware,
point-of-sale software, and payments technology, as well as managed payments
also provides Square Point of Sale software; Cash App, which provides access to
the financial system, allowing customers to electronically send, store, and
spend money; Caviar, a food ordering platform for restaurants to offer food
ordering, pickup and delivery, to their customers; and Square Capital that
facilitates loans to sellers based on real-time payment and point-of-sale data.
was founded in 2009 and is headquartered in San Francisco, California.
More Reasons Why The Initial Weekly Options Put Trade
on SQ Stock.....
Square earnings were 18 cents per share on an adjusted basis, down 72% from the
year-earlier period. Analysts had projected earnings of 16 cents a share.
said revenue dropped 6% to $4.4 billion, as Cash App transactions for digital
cryptocurrency Bitcoin fell. Analysts had predicted revenue of $4.33 billion.
profit came in at $1.47 billion, up 29%, vs. estimates of $1.495 billion.
payment volume from merchant customers rose 23% to $52.5 billion, vs. estimates
of $53.187 billion.
"The company has pulled back on experimental and less efficient
spend, along with adjusting its risk loss modelling and slowing the pace of
hiring," Deutsche Bank analyst Bryan Keane said in a note to clients.
"Due to scale and a new cost discipline focus, we believe SQ stock is
positioning for material margin expansion in 2023 and 2024."
Square on Dec. 1 changed its name to Block, while retaining the ticker
SQ. In part, the move reflected the company's commitment to blockchain
technology, which underpins cryptocurrency. SQ stock has dropped 72% since the
rebranding to Block.
Meanwhile, the price of Bitcoin stood at $19,240 on Sept. 22. In June,
Bitcoin fell below $19,000. Crypto assets have been under pressure.
The price of
Bitcoin has retreated 71% since peaking around $68,900 in November. For
investors in Square stock, a key question is when the price of Bitcoin will
Announced Aug. 1, the Afterpay deal was originally valued at $29
billion. With the big drop in Block stock, the deal was valued at less than $15
billion at closing.
Afterpay competes in the emerging "buy now, pay later" market
that encroaches on credit card networks. Apple (AAPL) has emerged as a rival to
Afterpay. Another rival of Afterpay is Affirm Holdings (AFRM).
Some investors questioned whether Block needed to buy a company in this
sector as opposed to building up its own capabilities or partnering.
Competition is heating up in the buy now, pay later market.
guidance includes an expected $1 billion in Afterpay operating expenses. UBS
analyst Rayna Kumar in a report said the "risk profile" of Afterpay
has changed amid rising interest rates and the potential of increased
With multiple products, SQ stock faces stiff competition in both
consumer financial apps and the small business market. Analysts expect Square's
rivalry with PayPal Holdings (PYPL) to heat up as they improve digital wallets.
What's more, Apple (AAPL) on Feb. 8 said it's rolling out a new iPhone
app. The new app will turn iPhones into a point-of-sale terminal. The service
will allow merchants to accept contactless credit or debit cards. And, Apple is
moving into the buy now, pay later market.
Other rivals include First Data's (FDC) Clover unit, Shopify (SHOP),
merchant acquirers, and well-funded startup Stripe.
disclosed a new $170 million investment in Bitcoin in early 2021 on top of its
$50 million purchase in October 2020. The company reports Bitcoin holdings as
unrealized gains on investments, and they will be excluded from adjusted
earnings, analysts say.
also is interested in developing a Bitcoin hardware wallet.
users are able to buy, hold and sell Bitcoin. Square's adjusted revenues from
Bitcoin are sales to app users, minus the cost of purchasing the digital
Bitcoin business has gross profit margins of only around 2%, analysts say.
Alyssa Henry sold 30,770 shares of the firm’s stock in a transaction on
Wednesday, June 22nd. The stock was sold at an average price of $60.14, for a
total transaction of $1,850,507.80.
Amrita Ahuja sold 8,130 shares of the company’s stock in a transaction dated
Monday, August 8th. The stock was sold at an average price of $88.13, for a
total transaction of $716,496.90.
In the last
90 days, insiders have sold 330,042 shares of company stock valued at
$23,659,951. Corporate insiders own 11.52% of the company’s stock.
Securities, analyst Dan Dolev downgraded Block stock on Sept. 22 to neutral. They now have a $57.00 price target on the stock, down
previously from $125.00.
years of rightfully being deemed the most innovative name in payments, we
believe user fatigue, plateauing inflows, loss of the best-of-breed POS status,
and BNPL mis-execution are blocking SQ's growth," Dolev said in a report.
still has enormous potential, but it is not being realized. Instead, BNPL
estimates continue to come down and projects like Bitcoin — which accounts for
5% of gross profit — seem to disproportionately preoccupy management's attention,"
Also, SMBC Nikko downgraded Block (NYSE:SQ) to Neutral as a number of
crosscurrents clouds its near- to medium-term prospects.
The firm believes that the company is one of the highest quality
long-term names in its fintech coverage, but pointed to Block's (SQ)
"hard-to-quantify, but material crypto exposure, lack of medium-term
visibility, and uncertainty around the potential impact of SQ's more
conservative investment strategy on medium-term growth." Note Block's (SQ)
guidance in August reduced its planned investments for 2022.
The company's analyst sees the knock-on impact of crypto more important
than its Cash App bitcoin (BTC-USD) revenue. For example, a Cash App user
buying $100 of bitcoin when the price was $10K and selling at $60K would result
in $500 of Cash App inflows. That could then increase Cash Card spend, instant
deposit and stock trading.
"Unfortunately, now that the price of bitcoin (BTC-USD) is ~70% off
its highs, we suspect the inverse dynamic is underway," the SMBC Nikko
analyst wrote in a note to clients.
Recently, the crypto sensitivity has been "somewhat masked" by
increased instant transfer pricing, Cash App borrowing, and tailwinds from Cash
App tailwinds. "That said, we think this creates a high bar for Cash App
in the quarters ahead and suspect any hiccup in results will put further
pressure on shares," the note said.
to the issued ratings of 40 analysts in the last year, the consensus rating for
Block stock is Moderate Buy based on the current 1 sell rating, 7 hold ratings
and 32 buy ratings for SQ. The average twelve-month price prediction for Block
is $135.76 with a high price target of $310.00 and a low price target of
disappointed in 2021, especially in the back half of the year.
wrestled with finding the right balance of revenue growth, investments and
stock has struggled enormously this year and is down more than 65%. In its most
recent quarterly earnings report, Block reported a net loss of about $208
million, which is in stark contrast to the $204 million profit it reported in
the second quarter of 2021. Gross payment volume grew almost $10 billion from
the year prior but came in below what analysts had been expecting.
Block has a market cap of $32.44 billion, a price-to-earnings ratio of
-61.46 and a beta of 2.45. Block has a 52 week low of $55.02 and a 52 week high
of $270.16. The business’s 50 day moving average is $73.52 and its two-hundred
day moving average is $87.82. The company has a quick ratio of 1.80, a current
ratio of 1.80 and a debt-to-equity ratio of 0.24.
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